Morpheus Trading: Stocks closed out the week with a productive session, with four out of the six major averages we follow able to hold on the rising 10-day MA. The S&P 500 and Dow Jones are the only averages below the 10-day MA, but the S&P 500 could easily reclaim the average within the next day or two.
Last Thursday’s selling on higher volume (distribution) looks to have masked some institutional buying on weakness, as the price and volume action in leaderships stocks remains quite bullish.
Market conditions remain solid, so as of right now, we still believe that the the current pullback should be short-term in nature and eventually give way to new swing highs.
In the ETF world, iShares Poland (NYSEARCA:EPOL) put in a bullish reversal last Friday, bouncing off support of the 20-day EMA on a pick up in volume. For the second session in a row, the price action bounced off support around the $30.30 to $30.40 area to close well off the lows of the day. We look for the uptrend to resume within the next few days:
iShares Malaysia ($EWM) has been in consolidation mode since Q4 of 2013, when the price action failed to hold the rising 40-week MA. Since reversing from a sharp selloff in January, the price action has held above the 10-week MA the past four months, with the 10wma crossing above the 40wma. Note that both moving averages are now trending in the same direction.